Younger sister given money for house deposit (PET)

toni232

Hi there,

My younger sister has recently been gifted money (by way of a cheque) which she may decide to use as a deposit on a home purchase.

As it is a large amount of money she's been gifted (£50,000), does she:

1. Need to have the gift of money registered anywhere? (HMRC perhaps?)
2. I bought a Monetary Deed of Gift form for her to use. Is it ok 'though if this deed is signed and witnessed a few weeks after the cheque has cleared to her bank?

Any advice would be greatly appreciated!

Toni
:j

davidmcn

toni232 wrote: »

1. Need to have the gift of money registered anywhere? (HMRC perhaps?)

No.

2. I bought a Monetary Deed of Gift form for her to use.

Nobody needs to pay for one - not very moneysaving! :money:

Is it ok 'though if this deed is signed and witnessed a few weeks after the cheque has cleared to her bank?

No reason in principle why not, though we can't see the wording of the deed from here...

Assuming she's buying with a mortgage, the gift letter/deed will need to be satisfactory from the point of view of her lender and solicitor.

toni232

Oh thank you so much for that David!

Do you happen to know if HMRC go after gift recipients for inheritance tax, that may be payable on a money-based gift, or do they usually ask for that from the estate? (of the person that gifted the money).

It's just that if my sister does decide to buy a house and HMRC come knocking asking for IHT payments (based on the gift she received) I know she wouldn't be able to pay!

p00hsticks

I've never heard of a 'monetary deed of gift'. In the past, I've just had a short letter written and signed by the donor giving the date, amount, and confirming that it is indeed a gift.

This is so that the gift is documented so that the executor can be made aware if the donor dies within seven years . It's also a uswful document to show to the mortgage company if the money's being used as a house deposit.

p00hsticks

toni232 wrote: »

Do you happen to know if HMRC go after gift recipients for inheritance tax, that may be payable on a money-based gift, or do they usually ask for that from the estate? (of the person that gifted the money).

Any inheritance tax due will come from the estate, unless there's not enough money to pay it, in which case they'll come after the recipients of the gift if it was made less than seven years ago..

silvercar

toni232 wrote: »

Oh thank you so much for that David!

Do you happen to know if HMRC go after gift recipients for inheritance tax, that may be payable on a money-based gift, or do they usually ask for that from the estate? (of the person that gifted the money).

It's just that if my sister does decide to buy a house and HMRC come knocking asking for IHT payments (based on the gift she received) I know she wouldn't be able to pay!

It should come from the estate. Whether morally it should come from her share of a future inheritance is a different question.

toni232

That really will be peace of mind for my sister. Thank you very much.

I believe there will be more than enough money in my aunt's estate to pay the IHT. I just know that whenever HMRC come calling they'll want paying right away, so it's good to know that they can't compel my sis to pay if there's sufficient money in my aunt's estate.

Thank you again,

:T

toni232

silvercar wrote: »

Whether morally it should come from her share of a future inheritance is a different question.

Yes, Silvercar, that is a great point. Morally, I think gift recipients probably should pay it!

davidmcn

Obviously (I hope) IHT is only a concern anyway if aunt dies in the next 7 years and her estate is large enough to be liable for IHT. Also gets tapered as you get closer to 7 years from the date of the gift.

toni232

davidmcn wrote: »

Obviously (I hope) IHT is only a concern anyway if aunt dies in the next 7 years and her estate is large enough to be liable for IHT. Also gets tapered as you get closer to 7 years from the date of the gift.

Oh yes David, that's great advice. Thank you.

I gather the taper relief is incremental, as you say. I am really pleased that my aunt gave my sister the money. It is such a worry 'though, receiving money from family members, particularly as the banks seem to assume we're all money launderers these days!...

So important to be pro-active I think where money is concerned...

:money:

Tom99

p00hsticks wrote: »

Any inheritance tax due will come from the estate, unless there's not enough money to pay it, in which case they'll come after the recipients of the gift if it was made less than seven years ago..

The £50,000 will reduce the nil rate band so unless other very substantial gifts have been made which take the total gifts above £325,000 there can be no question of this recipient being liable for any IHT.